NCLAT Affirms Resolution Professional’s Right to Terminate LLA and Recover Possession During Moratorium [Read Order]
NCLAT held that during the moratorium, the respondent could terminate the LLA and also was entitled to take legal action against the appellant.
![NCLAT Affirms Resolution Professional’s Right to Terminate LLA and Recover Possession During Moratorium [Read Order]](https://images.taxscan.in/h-upload/2025/07/31/2071390-nclat-ibc-taxscan.webp "NCLAT Affirms Resolution Professional’s Right to Terminate LLA and Recover Possession During Moratorium [Read Order]")
The Principal Bench of the National Company Law Appellate Tribunal (NCLAT) affirmed that a Resolution Professional is entitled to terminate a Leave and Licence Agreement (LLA) and initiate legal action to recover possession during the moratorium period under Section 14 of the Insolvency and Bankruptcy Code, clarifying that the protection of moratorium is meant for the corporate debtor...
The Principal Bench of the National Company Law Appellate Tribunal (NCLAT) affirmed that a Resolution Professional is entitled to terminate a Leave and Licence Agreement (LLA) and initiate legal action to recover possession during the moratorium period under Section 14 of the Insolvency and Bankruptcy Code, clarifying that the protection of moratorium is meant for the corporate debtor and not third parties.
In this case, the appeal was filed by Wakai Hospitality Pvt. Ltd under Section 61 of the Insolvency and Bankruptcy Code, 2016 (Code), challenging the order dated 29.02.2024 passed by the National Company Law Tribunal, Mumbai. The respondent in this case is Ms Palak Desai, who is the Liquidator of Rajmal Jewelers Private Limited.
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3 main issues were raised in the appeal, and one of them was that according to Section 14 of the Code, the moratorium period started, and Respondent No. 1 could not have initiated any proceedings against the Appellant or terminated the LLA
The bench noted that Section 14 aims to protect the corporate debtor during the resolution process, not third parties like the appellant. Hence, the claim that no action could be taken against the appellant during the moratorium is not valid. It further observed that the protection to the corporate debtor under Section 14 of the Code is given so that the Resolution Professional can try to resolve the corporate debtor under the guidance of the CoC.
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The tribunal further observed that “It is an obligation as well as the right of the resolution professional to protect the interest of the corporate debtor and take necessary action including realising recoverable dues from third party like the Appellant on behalf of the Corporate Debtor as well as take legal action in accordance with law to take possession of property in given circumstances.”
The bench concluded its judgment, noting that during the moratorium, the respondent could terminate the LLA and also was entitled to take legal action against the appellant.
The NCLAT, comprising Justice Rakesh Kumar Jain (Judicial Member), Naresh Salecha (Member Technical), and Indevar Pandey (Technical Member), upheld the impugned order.
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